Monthly Archives: August 2011

State media has been posting pictures of the PLA Navy’s latest generation of missile fast attack craft. The first of the high-speed catamarans appeared as long ago at 2004, but the fleet is being steadily built out, and now numbers in the dozens. We do wonder why they are being shown off now though, beyond showing there is more to the PLA-N than just an aircraft carrier.

The PLA-N is believed to be the first navy to use combat catamarans, as opposed to catamaran support vessels. Its are equipped with eight YJ-83 anti-ship missiles, launched from two pods at the stern. There is 30mm artillery for short-range air defence on the bow deck, plus a couple of four-tube tube launchers. The hulls are constructed to be more stable in choppy seas than conventional catamarans and use a wave-piercing design from Australia that is also used in passenger ferries in China.

The camouflage paints used on the missile catamarans in the picture above suggest that they will be used in the southern fleet. Those deployed in northern waters use a four-color scheme that includes black, as seen in the picture below.

Update: This pictorial show of sea power may mirror a real one being reported by the Financial Times which says that a Chinese warship confronted an Indian navy vessel in the South China Sea shortly after it left Vietnamese waters in late July. The implication of the naval challenge is that China is enforcing its belief that it is entitled to police the entirety of the South China Sea, over which it claims a sovereignty not acknowledged by its regional neighbors.

There is no let up in the drought parching southwestern China that has left at least 12 million people short of water across Yunan (seen above), Guizhou, Hunan, Sichuan and Chongqing. State media report that emergency response teams have now been dispatched to Sichuan, as they were to Guizhou and Yunnan earlier.

In Sichuan more than 2 million people now face water shortages, up from the 1.7 million reported earlier in the week. More than 1.2 million head of livestock are short of water and 70,000 hectares of crops in the province have been ruined. In Guizhou, 5.5 million people are reported short of water, and 2.8 million livestock. The drought conditions started in July and there is no sign of any break in the high temperatures that have persisted since. Reservoirs and rivers have shriveled or dried up, as has the reservoir at Qujing City in Yunnan shown in the photograph above taken on Aug. 23.

In all, across the four provinces and the municipality of Chongqing, 5.9 million hectares of crops have been affected. Earlier in the week, the National Bureau of Statistics said that the country’s early season rice harvest was 4.5% higher than last year’s despite the parched conditions in the southwest. Harvested acreage was down by 0.8%, the bureau noted.

China had commercial interests in Gaddafi’s Libya and will pragmatically rebuild its presence in the country once the end-game of the overthrow of the colonel has played out. Before the civil war started, some 75 Chinese companies, including 13 large state owned enterprises, were working on $19 billion worth of projects, mainly in oil services, railways, housing construction and telecoms. Evacuating more than 35,000 Chinese nationals from these in March was a source of some pride in Beijing.

What they left behind was contract work so there would have been billions of yuan of business losses and damage to work camps. The three big oil SOEs, CNPC, Sinopec and CNOOC, all had engineering projects in Libya, but no oil production. China was buying oil from Libya, not extracting and shipping it. China gets 3% of its oil from the country, a significant if not critical supply (and accounting for about 10% of Libya’s exports).

Some within the new Libyan leadership have suggested that China could be punished for backing the Gadaffi regime. In response, China has urged the new leadership to protect its interests in the country and promising “to play an active role in future reconstruction” under the aegis of the U.N. Wen Zhongliang, deputy head of the trade department in the Ministry of Commerce, says “we hope to continue investment and economic cooperation with Libya…China’s investment in Libya, especially its oil investment, is one aspect of mutual economic cooperation between China and Libya.”

China, along with Russia and Brazil, which also neither supported NATO airstrikes against Libya nor provided the anti-Gaddafi forces with military aid, will be attending the Libya reconstruction conference being convened in Paris by French president Nicholas Sarkozy on Sept. 1. “It is true that some Chinese companies are considering exploring opportunities or resuming their business in Libya, but the time is far from ripe, as there are still short-term risks,” Xie Yajing of the Commerce Ministry’s west Asian and African affairs department told the China Daily. Beijing has yet to officially recognize the Transitional National Council (TNC) as Libya’s government, though it is signaling that that will come, and it has maintained back-channel contacts with the TNC throughout the conflict.

Beijing has a lot of experience in operating in politically volatile parts of the world. It knows how to change horses, as it has shown in post-Saddam Hussein Iraq.

Update: Representatives of the Gaddafi regime visited three Chinese state-owned arms manufacturers in July, long after the imposition of UN sanctions on Libya, China’s foreign ministry spokesman has confirmed, but neither contracts were signed nor any arms shipped, she said. The firms involved are China North Industries Corp. (Norinco), China National Precision Machinery Import & Export Corp. (CPMIC) and China XinXing Import & Export Corp.

Leaders of the National Transitional Council in Libya say that they have evidence that other shipments of weapons were made. “We found several documents that showed us orders, very large orders, of arms and ammunition specifically from China, and now we do know that some of the things that were on the list are here on the ground, and they came in over the last two to six months,” according to Abdul Rahman Busin, NTC’s military spokesman.

Beijing won’t be wildly delighted by Japan’s choice of its new prime minister, finance minister Yoshihiko Noda, but it could have been much worse. Noda beat out four factional rivals for the leadership of the governing Democratic Party of Japan (DPJ), thus ensuring the formal anointment of the Diet as prime minister on Tuesday. Among the defeated quartet was the popular former foreign minister Seiji Maehara, a noted China hawk.

Noda made some injudicious remarks earlier this year about those enshrined in the Yasukuni Shrine as being ‘not really criminals’, which will give Beijing a stick to beat him with should it choose to use it (some state media commentaries are already recalling those remarks). Yet the bigger issue for Beijing is that Noda, a fiscal conservative schooled in free-market economics at the Matsushita Institute of Government and Management, may instinctively tilt more towards Washington than Beijing, as would also be expected for someone who has spent so long at Japan’s U.S.-centric finance ministry.

The effect might not be that noticeable on policy. More importantly, to this Bystander, Noda has little foreign policy experience and little need to acquire it in short order unless forced to. He was deputy to outgoing prime minister, Naoto Kan, as prime minister and finance minister before that. So he is deeply imbued with Japan’s primary domestic policy challenges: post-earthquake, tsunami and Fukushima reconstruction; years of deflation; the high yen and mounting deficits. He will have more than enough on his plate at home — exacerbated by a divided DPJ as his election marked a defeat for the DPJ’s largest faction led by Ichiro Ozawa. Foreign policy initiatives would be a distraction.

In a Noda administration, for however long it may last in Japan’s political shambles (six prime ministers in five years, three since the DPJ’s historic capture of the lower house of parliament two years ago), the U.S.-Japan alliance will continue to be the centerpiece of Japan’s security. Political ties with Southeast Asia will strengthen, advertised as a counterweight to Beijing’s growing regional clout. Meanwhile, economic relations with China and South Korea will continue to be developed to bring some prosperity across the transom. All much as has been happening. The question is to what extent Beijing will seek to test Noda over the disputed territorial conflicts in the East China Sea. We expect the temptation will prove too great to resist, if only to see how far he can be pushed.

China’s central bank appears to indulging in a little back-door monetary tightening. Reports say that the People’s Bank of China is widening its capital reserve requirement definitions of deposits to include the collateral deposited by customers against letters of credit and similar commercial banking services requiring margin deposits.

Such deposits added up to 4.6 trillion yuan at the end of July, as commercial banks used the services to skirt the lending curtailments intended by the step series of reserve ratio increases the central bank has been imposing. Caixin estimates that the new requirement will take a further 887 billion yuan ($139 billion) out of the banking system over six months, or the equivalent of a 130 basis points rise to the reserve requirement ratio, already at a record 21.5%.

Fighting inflation remains policymakers’ priority. The August consumer price inflation figure is forecast to remain above 6%, down only slightly from July’s 6.5%, a three-year high, and double the official target for the year.

Since April, authorities have been cracking down on the insidious business of hacking into web sites to remove unfavorable news articles and comments, and of hiring writers to post rumors, half-truths and outright lies about rivals. Firms offering such services advertise themselves as PR outfits. While we hold no particular torch for that industry such black arts are quite rightly illegal. The industry and information technology ministry now says it has uncovered 150 examples of the illegal practice and shut down 6,600 web sites supporting it. We would be being mischievous in the extreme if we were to say that the relevant state organs wouldn’t want their monopoly
infringed.

There isn’t anything eye-openingly new in the U.S. Defense Dept.’s latest annual report to the U.S. Congress assessing the state of China’s military. Like many others outside China, Pentagon planners remain nervous and uncertain about the geopolitical and military implications of the steady modernization of the People’s Liberation Army. Yet, their overwhelming, and, we hazard, accurate assessment is that the modernization of the PLA remains a work in progress, but one that is progressing to plan as China closes its military technology gap with the U.S., Russia and Japan. This passage sums it up:

Over the past decade, China’s military has benefitted from robust investment in modern hardware and technology. Many modern systems have reached maturity and others will become operational in the next few years. Following this period of ambitious acquisition, the decade from 2011 through 2020 will prove critical to the PLA as it attempts to integrate many new and complex platforms, and to adopt modern operational concepts, including joint operations and network-centric warfare.

Beijing set the PLA an objective of turning itself into a modern, regionally focused military by 2020. As the Pentagon’s report notes, it is pretty much on track. This year has seen two high profile milestones passed, the unveiling of a stealth aircraft, the J-20, in January and the sea trials of China’s first aircraft carrier earlier this month. But the Pentagon believes it will be the end of this decade before China is able to project even a modest scale of long-distance force, which it defines as several battalions of ground forces or a naval battle group of up to a dozen ships, in even low-intensity operations.

This evolution will lay the foundation for a force able to accomplish a broader set of regional and global objectives. However, it is unlikely that China will be able to project and sustain large forces in high-intensity combat operations far from China prior to 2020.

The key question is how effectively the PLA will meld its emerging platforms and capabilities, such as its growing number of ballistic missiles, into an effective fighting force. This will take time. Training and integration are a crucial task for the PLA high command in the coming years. It may be getting new toys, but its human capital is only now being upgraded. The PLA is poor at inter-service command cooperation and lacks experience in both joint exercises and operations, one reason that China is becoming more engaged in international humanitarian, disaster-relief and anti-piracy missions as well as undertaking more bi- and multilateral joint military exercises.

Recent reshuffles of the PLA’s top brass and new appointments are bringing about generational change among the military leadership, raising professional standards and accelerating the modernization of its command-and-control structures. The Central Military Commission named six new full generals and 20 new lieutenant-generals in July; all of the latter group are members of the so-called fifth-generation leadership. This generational change is also, incidentally, increasing the predominance of princelings, the offspring of the first generation of Mao’s revolutionary leaders and generals. That may mean the PLA gets even stronger support from civilian leaders (and vice versa as President assumptive Xi Jinping is himself a princeling); princelings are now the largest bloc within the military leadership. The CMC itself is likely to have a radical overhaul next year when many of its senior officers will have reached the age limit at which they have to stand down. The incoming leadership will be the most competent, best educated and professional the PLA has ever had, as well as being largely formed as individuals and officers in a China that has only been in the ascendant.

Taiwan contingency planning has largely dominated the PLA’s agenda throughout its modernization. Many of the PLA’s most advanced systems are based in its military regions opposite the island.

Although the PLA is contending with a growing array of missions, Taiwan remains its main strategic direction…The PLA seeks the capability to deter Taiwan independence and influence Taiwan to settle the dispute on Beijing’s terms. In pursuit of this objective, Beijing is developing capabilities intended to deter, delay, or deny possible U.S. support for the island in the event of conflict. The balance of cross-Strait military forces and capabilities continues to shift in the mainland’s favor.

China’s ability to sustain military power at a distance remains limited, if expanding, primarily through the PLA-Navy. A section of the report dealing with energy and security underlines the importance to China’s energy supply of securing sea lanes.

The report also flags up advances in China’s space and cyber operations, saying [Beijing] was “developing a multi-dimensional programme to improve its capabilities to limit or prevent the use of space-based assets by adversaries during times of crisis or conflict”. More importantly, China’s military strategists emphasize the importance of gaining the upper hand in electronic warfare early in a war as being one of the primary tasks to ensure battlefield success. The report notes:

PLA theorists have coined the term “integrated network electronic warfare (wangdian yitizhan 网电体战)’ to describe the use of electronic warfare, computer network operations, and kinetic strikes to disrupt battlefield information systems that support an adversary’s warfighting and power projection capabilities. PLA writings identify integrated network electronic warfare as one of the basic forms of integrated joint operations,” suggesting the centrality of seizing and dominating the electromagnetic spectrum in PLA campaign theory.

However, the report also notes that, “In the case of cyber and space weapons, however, there is little evidence that China’s military and civilian leaders have fully thought through the global and systemic effects that would be associated with the employment of these strategic capabilities.”

As a footnote, this Bystander’s eye was caught by this sentence in the report, “For over a decade PRC leaders have identified the so called ‘China threat theory’ as a serious hazard to the country’s international standing and reputation.” True to form and theory, Beijing has denounced it. “The report does not hold water as it severely distorted the facts,” said defense ministry spokesman Yang Yujun.